Nervous best describes US equity markets today, and with so many influences now coming to bear, and this nervous tension can only increase over the next few weeks.

The broad backdrop, of course, is the US presidential election, but against this and closer on the time horizon we have the FED who continue to confuse and obfuscate with their brand of meaningless rhetoric and sound bytes. The prospect of four rate hikes in 2016 is now consigned to the fairy story book of fables, and with September now well and truly off the table, and with the FED funds futures forecast falling relentlessly, we seem to be set for a rerun of 2015, with the probability of face saving FED hike in December.

Moreover, overnight data from China (FXI, quote) was mixed with the PPI coming at -0.8% against a target of -0.9%, with the CPI coming in at 1.3% against a forecast of 1.7% and down from the previous of 1.8% from last time, lending further concern to a coming slowdown in the global economy. And whilst writing this post news from Japan of further easing, and speculation of further interest rate cuts, can only make the FED’s decision even more tricky.

Europe of course has not helped the economic picture with Draghi’s borefest continuing, as he runs out of comments and ammunition, with the German Trade Balance reinforcing the weak picture for the eurozone, coming in at 19.4B against a forecast of 21.2B, and a previous of 21.4B. Exports fell by -2.6% against an expected 0.25% and a previous of 0.3%. Finally, with North Korea conducting a nuclear test, this has all added to the heightened nervousness of the markets that is reflected in early trading.

This is the fundamental background to the technical picture for the major indices which have been in an extended phase of price consolidation that stretches from the start of early summer, and moreover all three major indices exhibiting similar price action on the daily chart. If we begin with the YM (DIA, quote) for December, the price action here has been contained between the 18,600 area to the upside, and 18,300 to the downside, with only a minor break below the floor in early August. The very strong area of congestion and resistance is now building in the 18,500 area, denoted with the blue dotted line on the accumulation and distribution indicator, an area that has held firm in the last few weeks. Below, volume is building strongly around the volume point of control at 18, 420, and confirming the price agreement currently in play. The overnight news coupled with some yen buying, has seen the index move firmly lower to trade at 18,347 at time of writing. Below the platform of support is clearly defined with the dashed blue line at 18,300, and this is now key, and given we have the VPOC in this region we can expect further consolidation. However, once volumes pick up again after the summer recess, any move away from this level needs to be associated with strong and rising volume. The broad feeling is of a balloon that no one wants to burst at present. As always, the longer this congestion phase lasts, then the stronger the break away and subsequent trend will be once it develops.

Moving to the ES (SPY, quote) for December, this paints a similar picture, with the ceiling of resistance now in place at 2190, and the floor of support building in the 2150 area. Again we have the volume point of control reinforcing the price agreement in the 2167 area, as volumes build and being tested at time of writing. Yesterday’s volumes rose along with the selling pressure which has continued in early trading.

Finally to the NQ (QQQ, quote) and once again for the December contract. And here the story is slightly different with the index playing catch up with the other two. The congestion phase for the NQ emini was only established in mid August, and well behind the other two, which was also characterized with the price action during the summer. Here we had the YM and the ES in congestion, and the NQ rising slowly, having made a more stately recovery from the Bexit vote. Indeed on some days, the NQ rose whilst the others fell. Now we are back in relative price agreement once more, with the congestion building in the current price area, with a ceiling at 4840 and a floor at 4765. The yellow pivots clearly define the ceiling, but the VPOC has yet to move higher and away from the 4410 area. However, with volume now building quickly in the 4800 area, the volume point of control is likely to move soon and rejoin the other two indices, as they nervously await the FED meeting later in the month.

Anna Coulling is a trader with over 16 years’ experience and founder of AnnaCoulling.com